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How Snapchat Stacks Up

The mobile messaging company is valued at around $24 billion

March 2, 2017 | Mobile | Social Media

Snap Inc., the parent company of popular messaging app Snapchat, priced its initial public offering at $17 a share, valuing the company at roughly $24 billion, a source familiar with the situation told Reuters.

The valuation is higher than what was expected. Snap set a preliminary share price for its IPO of $14 to $16 a share, which initially valued the company at up to $22.2 billion, based on calculations from The Wall Street Journal.

By comparison, Facebook’s pre-IPO valuation was about $104 billion in 2012, while Twitter’s was $14.4 billion in 2013.

Facebook’s user base at the time of its IPO was more than 144 million monthly active users, eMarketer estimates, whereas Twitter’s was about 43 million.

eMarketer recently increased its US Snapchat usage projections for 2017 by more than 5%, forecasting that 70.4 million will use the platform. Interestingly, much of Snapchat’s growth is being driven by older users. This year, 6.4% of Snapchat’s users will be between 45 and 54 years old, up from the 4.2% previously projected.

Usage is also growing in the UK. In fact, Snapchat’s UK user base experienced explosive growth in 2016, jumping nearly 90% to reach 11.2 million users, according to eMarketer’s latest mobile usage estimates. And eMarketer projects Snapchat will register strong growth again in 2017—although nowhere near the superheated pace of 2016.

This year, Snapchat’s UK base will jump to 13.6 million people, which works out to roughly one-third of all UK smartphone users.

Snapchat’s user base has plenty of room to grow. The company reported 158 million daily global users as of Q4 2016, up from 46 million in Q1 2014. But, the global opportunity is there. Especially in markets where advertisers are spending heavily on mobile ads, such as in China, the UK, Germany and Australia.

"In the latest episode of "Behind the Numbers," Principal Analyst Cathy Boyle discusses Snapchat's unique ad offerings and the role they will play in the company's success."

—Rimma Kats

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